- HEXO Corp. (HEXO) and 48North Cannabis Corp (NRTH) have entered into a definitive arrangement agreement
- HEXO will acquire all of 48North’s issued and outstanding common shares in an all-share transaction valued at approximately $50 million
- 48North shareholders will receive 0.02366 of a HEXO common share in exchange for each 48North common share
- HEXO Corp is an award-winning consumer packaged goods cannabis company
- 48North Cannabis Corp. is a brand-led, consumer-centric licensed cannabis producer
- HEXO Corp. (HEXO) opened trading at C$7.39 per share
- and 48North Cannabis Corp (NRTH) opened trading at C$0.175 per share
HEXO Corp. (HEXO) and 48North Cannabis Corp (NRTH) have entered into a definitive arrangement agreement.
Under the terms of the agreement, HEXO will acquire all of 48North’s issued and outstanding common shares in an all-share transaction valued at approximately $50 million.
“As we continue down our path towards achieving a top two position in Canada by adult-use sales, we are looking forward to welcoming the 48North team into the HEXO family.” said Sebastien St-Louis, CEO and co-founder of HEXO Corp.
“48North’s innovative product portfolio complements HEXO’s existing brands which, combined with their additional market penetration, will further strengthen HEXO’s position in the Canadian market. We expect the deal could offer up to $12 million worth of accretive synergies within one year following the close and ideally position HEXO to continue executing on our domestic and international growth strategy.”
“48North has always been a brand-led, consumer-centric licensed cannabis producer with a mission to provide an expansive portfolio of high-quality, accessibly-priced products across the country,” said Charles Vennat, CEO of 48North.
“Like HEXO, 48North believes that the combination should deliver meaningful synergies, a stronger financial position with increased flexibility, and should position the combined company to meet growing consumer demand on a national basis. I believe this transaction is beneficial to our shareholders, customers, partners, and other stakeholders. We look forward to working closely with HEXO to complete this transaction,” added Charles Vennat, CEO of 48North.
Transaction highlights
- Strengthens HEXO’s position in the Canadian adult-use (recreational) market:
Assuming completion of the transaction and the previously announced transaction with Zenabis Global Inc., expected to close on June 1, 2021, the combined organization would be among the leading licensed producers in terms of combined Canadian recreational sales, based on their most recent financial statements and results. - Diversifies product portfolio:
The addition of 48North’s innovative product offering, including topicals, bath and intimacy products provides a strong base for potential future CPG partnerships in the US, Canada and internationally. - Offers accretive synergies:
HEXO expects to realize annual synergies of up to $12 million within one year of close, through cost of goods reductions, additional capacity utilization in HEXO’s Belleville Centre of Excellence and selling, general and administrative savings, which, if realized, should allow HEXO to continue its path towards positive earnings. - Provides 48North shareholders access to participate in HEXO’s future:
The 48North shareholders will receive HEXO common shares following the closure of the transaction along with access to HEXO’s expertise in manufacturing, operational excellence and the Powered by HEXO solution. 48North shareholders will also benefit from HEXO’s wide adult-use distribution networks and future growth in Canada, the US and internationally.
Under the terms of the agreement, 48North shareholders will receive 0.02366 of a HEXO common share in exchange for each 48North common share.
The transaction has been unanimously approved by HEXO’s board of directors.
48North’s board of directors also unanimously approved the transaction after receiving the unanimous recommendation of a special committee of independent directors. 48North’s board of directors unanimously recommends that its shareholders vote in favour of the transaction.
The transaction requires approval by at least two-thirds of the votes cast by the shareholders of 48North present at a special meeting.
The agreement also provides for a termination fee of $2.0 million payable by 48North to HEXO if the transaction is terminated.
In addition to the approval by 48North’s shareholders, the transaction is subject to the receipt of certain regulatory, court and stock exchange approvals.
HEXO Corp is an award-winning consumer packaged goods cannabis company that creates and distributes innovative products to serve the global cannabis market.
48North Cannabis Corp. is a brand-led, consumer-centric licensed cannabis producer with an expansive portfolio of high-quality products available across the country.
HEXO Corp. (HEXO) opened trading at C$7.39 per share.
48North Cannabis Corp (NRTH) opened trading at C$0.175 per share.